1120-US: Calculating the built-in gain tax (FAQ)

Alerts and notices

Question

How does UltraTax CS/1120 calculate the built-in gain tax?

Answer

The built-in gain tax is calculated on the Built-In Gains Tax Worksheet. UltraTax CS prints this worksheet when there is data entered in any of the following places.

  • The FMV at S Election Date and Adj Basis at S Election Date columns in the Detail schedule statement dialog in Screen D
  • The Ordinary income: Recognized Built-In Gain (Loss) statement dialog in Screen D
  • The Recognized Built-In Gain Carryover column fields in Screen D
  • The Fair market value at S Corporation election date (S Corp) and Adjusted basis at S Corporation election date (S Corp) fields in Screen Sale

    Note: These fields are also available in the Disposal tab in the asset module.

  • The Net unrealized built-in gain (S Corp) field in Screen InstPY

The built-in gain tax is allocated to the category of income in which the tax was generated. For example, if the S Corporation disposed of both a long-term capital asset and an ordinary income asset that was subject to the built-in gain tax, a portion of the tax would be allocated to the long-term capital gain, and a portion of the tax would be allocated to the ordinary income.